topic 2- Distributions of Wealth

• Wealth vs income

  -Wealth: Ownership of assets

  -Income: Flow of resources received by the individual
• 1.How much wealth do the top 10% own in the UK?

  2.And the top 50%?

  3.And the bottom 50%

  4.Describe the changes in the distribution of income between 1979 and 2022/23.

  5.What do these changes suggest about the gap between the rich and the poor?

  1.43% of wealth

  2.48% of wealth

  3.9% of wealth

  4.since 1980, incomes have increased faster for thr most affluent families-those in the top 5%

  5.income inequality is increasing-1.3% to 35.7%
• Government attempts to redistribute wealth- IM SIC


  -->Income tax-Payable on earned and unearned income; this is generally progressive as it rises as earnings increase

  -->Mansion Tax-People who own expensive properties (e.g. over £2 million) could face a 1% tax on them (backed by Labour and Lib Dems but not Conservatives)

  -->Social welfare benefits-From the state, like Income Support and Jobseeker's Allowance, which are generally seen as attempts to divert the resources obtained through taxation to the needy sections of society

  -->Inheritance tax-Tax payable on gifts of wealth before/after death - intended to limit inheritance of vast quantities of wealth from one generation to the next

  -->Capital gains tax-Intended to reduce profits from dealing in property or shares, and is payable whenever these are sold
• Factors that fail the distribution of wealth

  -->Tax evasion-An ILLEGAL strategy that involves not declaring tax/ wealth to Income Revenue

  -->Tax relief-Relief on paying tax for school fees, private pension etc.

  -->Failure to claim benefits-Applications being too difficult/ complicated to complete

  -->Tax avoidance schemes-A LEGAL strategy used by accountants/ financial advisers (living abroad for a year, spreading wealth within the family, investing within the British Isles
• Evaluation


  -Pros: thinking progressively, attempting to be fair system, covers a wide range of resources, income tax facilities, means more resources + services (e.g healthcare)

  -Cons: some legislation is hard to understand, highest earners think its unfair, some sociologists states there is a dependency culture amongst certain groups which may drain resources, people avoid paying tax through evasion
• Marketable wealth


  assets that people have their potential sale value such as stocks, shares or a second house
• Non-marketable wealth


  assets that can't be easily liquidated to cash in a timely or cost-effective manner e.g investment in limited partnership
• Productive property

  assets that generate profits and cash flow e.g renting, stocks, real estate
• Consumption property


  property that is produced and used for personal use e.g technologies
• Case Studies

  -->Gary Barlow created a scheme to avoid tax but was forced to pay back all the unpaid tax

  -->Philip Green-Suspected tax evasion after declaring bankruptcy/ redundancy for BHS employees As a result, Green was asked to provide pensions for employees, however, Green could not account for the funds. Since then, a court order has been issued to which Green has agreed to begin the repayment process
• Sociological explanations for the income inequality gap

  -->Failure to claim benefits: Stigma, Lack of awareness of entitlement to benefits

  -->Job insecurity: Outsourcing, Competition, University retention rates, Brexit

  -->Decline in Trade Unions: Late 1970s: 13million + members, 2010+: 6.5milliop

  -->Growth in Lone parent families, Increase in one-parent households, Also seeing an increase in two-earner, cohabiting households

  -->Globalisation: Technology, The ability to connect worldwide
• Evaluation

  -->Davis & Moore (1945) Functionalist-Inequalities in wealth and income are necessary to maintain society, Specialised skills are required that not everyone in society has the talent and ability to acquire, there must therefore be a system of unequal rewards to make sure the most able people get into the most important social positions.

  -->Interactionist- Inequalities in wealth and income arise from differences in people's market situation, market situation refers to the rewards that people are able to obtain when they sell their skills on the labor market.

  -->Other criticisms- The distribution of wealth is based on subjective opinion and personal value judgment. Some people have high levels of wealth and income because they have inherited their wealth.